CALGARY, Alberta (Reuters) - Canadian rig contractor Precision Drilling Corp (PD.TO) said on Thursday it was growing more confident that long-term stability is returning to the oil industry, and it expects to charge higher fees for its rigs if oil prices recover further.
Calgary-based Precision also reported a smaller-than-expected fourth-quarter loss and lower operating costs, adding to the tone of cautious optimism as the Canadian energy sector, slowly recovers from a 2-1/2-year slump.
As global crude prices have risen, oil and gas companies have been putting more rigs to work, especially in shale fields. U.S. crude prices CLc1 averaged $49.29 per barrel in the fourth quarter ended Dec. 31, up 16.9 percent from a year earlier.
Precision Chief Executive Officer Kevin Neveu said the duration and severity of the downturn had been deeply challenging for the whole energy industry but the outlook was improving and customers were booking rigs into the second and third quarters of 2017.
“We are pleased that the industry is transitioning into a recovery cycle. It’s very good to put 2016 behind us,” Neveu told analysts on a fourth-quarter earnings call.
The company has added 107 rigs and 1,800 people since the lowest point of the cycle in the second quarter of 2016, Neveu said, although he also warned the challenge of recruiting good people “cannot be overstated.”
Precision said that as of early February, the U.S. active land drilling rig count was up approximately 30 percent from the same point last year and the Canadian active land drilling rig count was up approximately 42 percent.
The company expects 2017 capital spending to be C$108 million, down nearly 47 percent from last year.
Precision’s net loss narrowed to C$31 million ($23.6 million) from C$271 million, a year earlier.
The company’s loss was 12 Canadian cents per share, lower than the average analysts’ estimate of 15 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Analysts welcomed the results and Precision’s shares rose 0.8 percent on the Toronto Stock Exchange to C$7.27.
“While there can be no certainty that oil prices will improve beyond today’s levels, visibility into Q2 and Q3 has improved and thus far looks better than the prior year,” BMO Capital Markets analyst Michael Mazar said in a note to clients.
($1 = 1.31 Canadian dollars)
Additional reporting by Vishaka George in Bengaluru; editing by Sriraj Kalluvila and David Gregorio